Concept of Brand Equity
What is Brand Equity?
There is no universally accepted definition of brand equity. The term means different
things for different companies and products. However, there are several common
characteristics of the many definitions that are used today. From the following
examples it is clear that brand equity is multi-dimensional. There are several
stakeholders concerned with brand equity, including the firm, the consumer, the
channel, and some would even argue the financial markets. But ultimately, it is the
consumer that is the most critical component in defining brand equity. Some
researchers in the field of marketing have defined brand equity as follows:

Lance Leuthesser, et al (1995) writes that “… brand equity represents the
value (to a consumer) of a product, above that which would result for an
otherwise identical product without the brand’s name. In other words, brand
equity represents the degree to which a brand’s name alone contributes value
to the offering (again, from the perspective of the consumer).”

The Marketing Science Institute (1988) defines brand equity as, “The set of
associations and behaviors on the part of the brand’s customers, channel
members, and parent corporations that permit the brand to earn greater volume
or greater margins than it could without the brand name and that gives the
brand a strong, sustainable, and differentiated advantage over competitors.”
Brand equity can be defined as three distinct elements:
1. The total value of a brand as a separable asset — when it is sold or included
on a balance sheet.
2. A measure of the strength of consumers’ attachment to a brand.
3. A description of the associations and beliefs the consumer has about the brand.
Of those three concepts, the first can be classified as “brand valuation,” the second
“brand loyalty,” and the third “brand description.” Brand loyalty will be a factor that
affects the overall brand value, and brand description will usually affect or explain
some of the brand loyalty. Because of the importance of each of these elements of
brand equity, they will each be briefly explained.
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